In court, Airbnb and A.G. dig in on data demands

ALBANY—Airbnb, the popular short-term rental site, faced off in New York State Supreme Court on Tuesday against Attorney General Eric Schneiderman’s office over subpoenas sent to the company seeking information about its thousands of users.

The judge in the case, Gerald Connolly, did not issue a ruling Tuesday on whether the attorney general’s subpoenas were valid.

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In recent months, Airbnb, which was founded in 2008 and now lists more than 600,000 rentals in 160 different countries, has come under fire from New York City lawmakers and the attorney general’s office for possible violations of state tax and housing laws.

Schneiderman’s office sent subpoenas to Airbnb officials in October.

The attorney general’s office has speculated that Airbnb’s site, which allows home owners and apartment renters to list their homes for rent for days or weeks at a time, could violate housing laws that prohibit renters from letting out their apartments for less than 30 days at a time.

Roberta Kaplan, counsel for Airbnb, argued the A.G.’s subpoenas were overbroad, because they sought information about every host in New York state, including their address and information about how they received payment for renting their homes. The subpoenas would have sought information from people who couldn’t possibly be breaking any laws, Kaplan argued.

She said the attorney general’s office has failed repeatedly to give Airbnb advice on how the state’s hotel and sales tax laws should apply to the site’s hosts.

“Airbnb has now tried for quite a long time to get clarity from the New York Attorney General’s office” about “how those laws apply to Airbnb and how they should be applied to Airbnb,” Kaplan said.

“Airbnb has actually tried to work with the attorney general’s office to make clear disclosures on its website,” she said.

The company “has even offered to help collect those taxes in New York,” she said.

“It’s hard to understand what the proper public purpose of these subpoenas could be,” she said.

Kaplan speculated the attorney general’s office might be seeking information about the site’s users in order to calculate how best to retroactively interpret the tax laws, in an attempt to find an interpretation that yields the greatest revenue for the state.

The case for the attorney general’s office is being argued by Karla Sanchez, executive deputy attorney general for economic justice.

Sanchez said the subpoenas were broad because her office has little data to determine which of the site’s users are potentially violating the law.

Sanchez showed the judge a screengrab of the site’s web page, and pointed out that a majority of the site’s listings in New York City are for less than thirty days, and offer to rent the “entire apartment.”

“That to me is sufficient evidence to demonstrate people are using site in illegal way,” Sanchez said.

Earlier, the office attempted to enter into the court record an affidavit showing Airbnb purged 2,000 listings from its site on Friday evening, which Connolly denied.

Sanchez dismissed Airbnb’s claim that the state’s subpoenas constituted a burden to the company.

“The excuse that 'we’re complicated, so somehow we should get a pass,' a hall pass on paying taxes, just doesn’t resonate with me,” she said.

Connolly had several pointed questions for Sanchez about the broadness of the state’s subpoena, which applies to every Airbnb user statewide. Users in New York cities with populations under 325,000 are not subject to the multiple dwellings law, making it impossible for them to have violated it, Connolly said.

“Overbreadth happens when a subpoena, on its face, is clearly asking for something that cannot be the subject of law enforcement agency’s investigatory action,” Connolly said.

He asked lawyers for both sides if they wanted to consider negotiating with one another, possibly to reach a settlement. They did not.

“Today, the Attorney General again made it clear that he remains determined to comb through the personal information of thousands of regular New Yorkers just trying to make ends meet,” Airbnb public policy chief David Hantman posted on the site.

“We were proud to stand up for our hosts who share their homes and against this over-broad, government sponsored fishing expedition.”

Matt Mittenthal, a spokesman for the attorney general’s office, had a similarly brusque response.

“Despite all of AirBnb’s rhetoric, the company has never denied that substantial illegal activity is taking place on its site,” Mittenthal said in an emailed statement.

“To the contrary, AirBnb decided before our hearing to remove 2,000 listings posted by 'bad actors'– hardly isolated cases. The Attorney General will continue to stand up for the law that protects building residents and tourists alike, and we await the judge’s decision.”